Maine lawmakers learned today that the state budget will end the fiscal year about $12 million in the red due to spending at the Department of Health and Human Services. The LePage administration says it has a plan to address the shortfall, which renewed the health care debate between Republicans and Democrats.

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Maine to End Fiscal Year about $12 Million in Red

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Gov. Paul LePage began his administration 18 months ago saying that Maine taxpayers could no longer afford many health care programs for the poor. His most recent goal was to bring the state into fiscal balance with two supplemental budgets that slashed more than $200 million in spending.

But as the state nears the June 30 expiration date for the current fiscal year, state Department of Health and Human Services Commissioner Mary Mayhew says Maine is coming up about $12 million short. "We sent out a communication to providers to alert them to the likelihood that the last week of cycle payments, that we will likely need to cap those cycle payments," Mayhew told members of the Legislature's Appropriations Committee.

Mayhew said that the state is exhausting all existing revenue options as it attempt to close the shortfall. But she is also prepared to confront the revenue shortage.

"Depending on where we end with the claims that we receive and the available funding, we are going to either cap payments or delay payments for a very brief period of time, and then run a special cycle payment at the beginning of the next fiscal year, so that we can minimize, to the extent possible, the impact on providers and the delay," Mayhew says.

For some members of the Appropriations Committee--which has already reviewed two of LePage's DHHS supplemental budgets since January--the $12 million shortfall seemed like a problem that could have been handled another way. State Rep. John Martin, an Eagle Lake Democrat, says that since many health care providers had accepted overpayments from the state, they should also be part of the solution for repaying the state.

Stephanie Nadeau, the state's MaineCare director, said the state had identified about $16 million in overpayments to providers, and has, thus far, collected about $7 million of that amount.

"We are preparing this week to notice debt to certain providers that we have, for months, been working with, and they've agreed to pay us, and over the nine-month process of this collection work that we have been doing, have not," Nadeau told the committee. "And so we are preparing to notice the debt."

"Maybe we ought to give it to Maine Revenue Service, they can recover pretty quick, you know," Martin said, "with interest and penalties I might point out."

Other Democrats on the committee told Mayhew they were stunned with the administration's insistence that Maine's spending on Medicaid programs was out of control when compared to the rest of the country. State Rep. Peggy Rotundo, of Lewiston, is the lead Democrat on the the panel.

"We were presented with figures today that shows the average growth in MaineCare over the last five years to be 3.0 percent," Rodundo says. "Three percent growth in five years is not indicative of growth that's out of control."

State Rep. David Webster, a Freeport Democrat, said Republican tax cuts of a half-billion dollars were part of what was driving the loss of revenue for DHHS. "We continue to cut the budget by reducing revenues, and then come back and say, 'We were overspending,' which is not true," Webster says. "What we're doing is underfunding."

'That certainly wouldn't be the case in this cycle, to any great extent," says Sen. Richard Rosen, a Bucksport Republican who co-chairs the Appropriations Committee. Rosen disputed both Rotundo and Webster's assertions, saying that without the new reforms, the 10-year view of state spending on MaineCare programs would be unsustainable. And he said state projections still envision revenue increases -- even with the tax cuts.

"When we look ahead at revenue projections, we see that even with the tax cuts in place that the revenue growth for the next Legislature in the next two years out still does increase even with assumptions of a modest recovery and with the tax cuts," Rosen says.

The Appropriations Committee plans to review state spending again in August.